Report finds potential for insurance savings under consolidated coverage
Uncle Sam pays
Could there be considerable savings in consolidating these groups by creating a
Sen.
Key findings were presented before a breakfast group at Commonwealth North
Ricci summarized the 400-page Health Care Authority Feasibility Study, compiled during six months in 2017 for the
The study concludes that there are definite benefits of establishing an HCA. It would consist of people in the Medicaid program,
"It will be challenging, managing billions of dollars in annual spend," Ricci said.
Some employees may balk at joining a reconfigured mandatory pool for insurance, she added. But given the huge current costs to the state and benefits of finding better values, the bottom line of the report is that there are good reasons to pursue an HCA. The idea will need further analysis and vetting, however, to avoid unintended consequences, Ricci said.
An HCA is an entity that would be operated by a board of directors to identify opportunities to coordinate plan administration and consolidate purchasing for individuals whose health benefits are funded directly or indirectly by the state.
It would have the ability to buy insurance on behalf of marketplace users and government employees. A larger pool of participants and ratepayers would theoretically lower costs for all involved, Ricci said.
The study addresses the statutory requirements outlined in SB 74 and are intended to begin the conversation on the difficult discussions of what Alaskans see as the future for publicly funded health care, Ricci said.
Currently a patchwork of policies divide the state pie this way:
A key finding is that
This compares to an estimated national average of state employee health plan spending at
"The extraordinarily high and rapidly escalating cost of
Savings could be found in consolidating a wide range of health policies, Ricci said. They could move to a more simplified tier system. School district health plans, which vary considerably, also could benefit from better efficiencies, Ricci said. There may be a provider bid process to bring competition into the purchase of health care.
Foster, who analyzed
"It's a problem. You go to get coverage and every year you look at the risk pool -- annual cost escalation is inevitably higher," Foster said.
To analyze costs, he looked at public and private claims data by employer to find out why are costs so high.
"Do we have a utilization problem of high utilizers collectively? Or do we have a price challenge, where the prices charged are higher?" He said. " When I drill into that data, I find a very high price challenge."
Prices for many specialty medical procedures and revenue for commercial payers were four times higher than other markets like
He then compared price escalation in
"Hospitals escalated at 3 percent. In western states, their cost was 2.9 percent. Physician and clinical services was a different story," he said.
Where 2.5 percent increases were found in western states, in
"When I drill down into physician and clinical services, I find particularly high costs and escalating for that time period," he said.
His state claims look extended into 2016, and again he saw another rapid price escalation.
Foster believes the findings show there are opportunities with respect to price, "if you consolidate market power. That's the basis if my analysis."
As he looked back at prices and supply, Foster also saw a relatively rapid increase in new doctors and specialty clinics. This is creating a better environment for competition, which could start to force prices down.
"We've been adding more per population than other places. Based on that, we do have room to squeeze the price," he said.
Price negotiations and consolidation could bring savings on the order of 5 percent to 15 percent. Already, he said he learned of price discounts as more specialists in 2016-17 joined
"There is some price flexibility in the market by consolidating on the buy side. Public health trusts have had some success negotiating prices," he concluded.
Extensive public discourse, stakeholder engagement, and full legislative buy-in will be required for the state to move forward with any of these recommendations, Ricci said.
Public comments on the report closed
Correction: This story was updated to clarify the amount of federal spending is also associated with the federal Medicaid match, the portion of Medicare payments estimated to cover eligible state retirees, and federal funds associated with the individual market.
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(c)2017 the Alaska Journal of Commerce (Anchorage, Alaska)
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